Leading cryptocurrency exchange KuCoin this week reported declines across key asset reserves, including bitcoin, ether, and USDT stablecoins. According to its latest proof of reserves certificate, holdings dropped 3-4% from August as some users withdrew funds from the platform.
Data from analytics provider Defillama substantiated the trend, recording $118 million in net outflows from KuCoin over the past month. The drainage points to dwindling confidence among customers unsettled by markets and shifting regulatory landscapes.
KuCoin’s Bitcoin stockpile dropped by 4%
KuCoin’s reserve certificate showed its bitcoin stockpile decreased by around 4% to just over 17,600 BTC in September. Ether holdings fell 3% to about 148,000 ETH, while USDT reserves dropped 4% to approximately $837 million.
The reductions coincide with the extreme volatility rocking cryptocurrency markets in 2022. Skittish investors tend to move assets into stablecoins or external wallets during periods of uncertainty.
In addition, intensifying crypto exchange regulation worldwide has spooked some users. While modest overall, sustained outflows of funds present risks to exchange viability and market stability.
Nonetheless, the climate suggests exchanges like KuCoin must take proactive steps to strengthen confidence. Regular attestations through reserve certificates provide one avenue to demonstrate solvency.